Nouveautés de la directive 2023/2225 relative aux contrats de crédit aux consommateurs

La directive 2023/2225 relative aux contrats de crédit aux consommateurs et abrogeant la directive 2008/48/CE a été publiée au Journal officiel de l'Union européenne du 30 octobre 2023. Elle entrera en vigueur le 19 novembre prochain et les Etats membres devront la transposer au plus tard le 20 novembre 2025. Dans cette newsletter, nous explorons les principales nouveautés par rapport à l'ancienne directive.

Champ d'application étendu à de nouveaux contrats et à de nouveaux acteurs

Les offres suivantes sont désormais couvertes par la réglementation :

- contrats de crédit dont le montant total du crédit est inférieur à 200 EUR

- contrats de location ou de crédit-bail dans le cadre desquels une simple option d'achat de l'objet du contrat est prévue dans le contrat ou dans un contrat séparé

- contrats de crédit accordés sous la forme d'une facilité de découvert, remboursable dans un délai d'un mois

- contrats de crédit sans intérêt et sans autres frais

- contrats de crédit en vertu desquels le crédit doit être remboursé dans un délai ne dépassant pas trois mois, et pour lesquels ne sont requis que des frais négligeables

- contrats de crédit dont le montant total du crédit est supérieur à 75.000 € (le plafond étant relevé à 100.000 €)

- contrats de crédit (non garantis par une hypothèque) à la rénovation d'un immeuble à usage résidentiel dont le montant total du crédit est supérieur à 100.000 €

- les plans " Buy Now Pay Later " (ou " BNPL ") en vertu desquels un prêteur tiers octroie un crédit à un consommateur pour la seule fin d'acheter des biens ou des services fournis par un prestataire, qui permettent aux consommateurs de faire des achats et de les payer au fur et à mesure

- les services de crowdfunding fournis aux consommateurs via une plateforme numérique en accès public.

Publicité et pratiques commerciales réglementées

Les publicités - nouvelles mesures pour celles qui n'indiquent pas un taux d'intérêt ou des chiffres liés au coût du crédit, mention des informations standard à l'aide d'un exemple représentatif et des publicités interdites sont prévues.

L'octroi d'un crédit non sollicité est interdit - Cela vise également l'envoi aux consommateurs de cartes de crédit préapprouvées non demandées, l'introduction unilatérale d'une nouvelle facilité de découvert ou de dépassement ou l'augmentation unilatérale de la limite de découvert, de dépassement ou d'utilisation d'une carte de crédit d'un consommateur.

Les ventes liées sont interdites. Il est interdit de proposer ou de vendre, sous forme de lot, un contrat de crédit en même temps que d'autres produits ou services financiers distincts, lorsque le contrat de crédit n'est pas proposé au consommateur séparément. Des exceptions sont permises et concernent l'ouverture ou la tenue d'un compte de paiement ou d'épargne pour certaines finalités, une police d'assurance appropriée liée au crédit avec, dans ce cas, l'obligation pour le prêteur d'accepter la police d'assurance établie par un prestataire différent en cas de niveau de garantie équivalent à celui de la police qu'il a proposée.

Les ventes groupées sont autorisées. Le contrat de crédit peut être proposé en même temps que d'autres produits ou services financiers distincts lorsque le contrat de crédit est aussi mis à la disposition du consommateur séparément (le cas échéant à des conditions différentes).

Renforcement des informations précontractuelles

Nouvelles informations générales - Les prêteurs ou, le cas échéant, les intermédiaires de crédit devront assurer la disponibilité permanente d'informations générales sur papier ou autre support durable (qui doit être choisi par le consommateur) sur toute la gamme des produits et services offerts en précisant les principales caractéristiques (la directive impose un contenu minimum).

SECCI - Le contenu et la mise en page sont modifiés. Si le SECCI est fourni moins d'un jour avant la conclusion du crédit, un rappel obligatoire doit être envoyé au consommateur entre 1 et 7 jours suivant la conclusion l'informant de la possibilité de se rétracter du contrat de crédit. 

Explications adéquates - Leur portée est étendue aux services accessoires proposés avec le crédit. Le but reste de permettre au consommateur de déterminer si le contrat et les services accessoires sont adaptés à ses besoins et à sa situation financière. Un contenu minimal y est précisé.

 Services de conseils facultatifs et, le cas échéant, payants

Les services de conseil sont définis comme la fourniture de recommandations personnalisées à un consommateur en ce qui concerne une ou plusieurs opérations liées à des contrats de crédit et dont la fourniture constitue une activité distincte de l'octroi de crédit et des activités d'intermédiaire de crédit. La prestation des services de conseil peut être rémunérée par le consommateur.

 Evaluation de la solvabilité étoffée

Les règles en matière d'évaluation de la solvabilité du consommateur sont plus détaillées. L'évaluation doit être rigoureuse et être effectuée dans l'intérêt du consommateur en prenant en compte tous les facteurs pertinents permettant de vérifier si le consommateur sera en mesure de remplir ses obligations jusqu'au terme du contrat. L'évaluation doit être effectuée sur la base d'informations pertinentes et exactes relatives notamment aux revenus et dépenses du consommateur, obtenues auprès de sources internes ou externes pertinentes, y compris auprès du consommateur. Les considérants de la directive en précisent le contenu : les informations devraient comprendre au moins les revenus et les dépenses du consommateur, en prenant en considération de manière appropriée les obligations actuelles du consommateur, entre autres les frais de subsistance du consommateur et de son ménage, ainsi que ses engagements financiers. Ces informations ne comprennent pas les données à caractère personnel qui révèlent l'origine raciale ou ethnique, les opinions politiques, les convictions religieuses ou philosophiques ou l'appartenance syndicale, les données génétiques, les données biométriques, des données concernant la santé ou des données concernant la vie sexuelle ou l'orientation sexuelle d'une personne physique. La solvabilité ne peut en outre pas être évaluée sur base des informations obtenues auprès des réseaux sociaux.

 Les informations recueillies sont vérifiées de manière appropriée, si nécessaire sur base de documents vérifiables.

 Services accessoires

Il est interdit de présupposer le consentement du consommateur à l'achat de services accessoires au crédit, notamment via des cases précochées. Le consentement doit être donné par un acte positif du consommateur.

Caps des taux

La directive impose la mise en place de mesures pour éviter les abus et faire en sorte que les consommateurs ne se voient imposer des taux débiteurs, des taux annuels effectifs globaux ou des coûts totaux du crédit pour le consommateur excessivement élevés, tels que des plafonds.

Soutien des consommateurs en difficulté financière

Mesures de renégociation des contrats - Les prêteurs auront l'obligation d'appliquer, s'il y a lieu, des mesures de renégociation des contrats des consommateurs en difficulté financière avant l'ouverture d'une procédure d'exécution. Ces mesures peuvent notamment porter sur un refinancement total ou partiel d'un contrat de crédit ou une modification des conditions existantes d'un contrat de crédit. La directive contient à cet égard une liste de modifications potentielles, toutefois sans préjudice des règles énoncées dans le droit national.

Conséquences financières des défauts de paiement - Si des frais sont autorisés en cas de défaut de paiement, ils sont limités à ce qui est nécessaire pour indemniser les coûts supportés par le prêteur suite au défaut de paiement. Les éventuels frais supplémentaires sont plafonnésConseils personnes endettées - Les prêteurs devront disposer de processus et politiques permettant la détection précoce des consommateurs qui éprouvent des difficultés financières. Ils devront orienter les consommateurs qui éprouvent des difficultés à respecter leurs engagements financiers vers des services de conseil aux personnes endettées. liliresc 

Conseil aux personnes endettées - Les prêteurs devront disposer de processus et politiques permettant la détection précoce des consommateurs qui éprouvent des difficultés financières. Ils devront orienter les consommateurs qui éprouvent des difficultés à respecter leurs engagements financiers vers des services de conseil aux personnes endettées.

Prescillia Algrain

New Medical law publication about physical restraints in general hospitals in Belgium

We are pleased to share Marie-Noëlle Lippens-de Cerf’s new Medical law publication about physical restraints in general hospitals in Belgium, tackling issues of medical liability and patients’ rights.
 
You can find it in the online version of the «Revue belge du dommage corporel et de médecine légale », available on Revue belge du dommage corporel et de médecine légale (Consilio manuque).

Newly released handbook on the law obligations

Flavie Vermander, counsel at Janson, has made a contribution to this handbook on the law of obligations by Prof. Thierry Vansweevelt and Britt Weyts. Flavie specializes in contract termination. Congratulations to all the contributing authors on the release of this essential handbook.

Full details regarding this new book can be found on the webpage of the editor Larcier : Handboek Verbintenissenrecht (tweede editie) (gebonden editie) ~ Boek ~ Larcier-Intersentia.

Fusions, acquisitions, PRJ : du neuf pour les entreprises

Les restructurations d’entreprises connaissent des évolutions significatives, que ce soit sur le plan légal ou au niveau des tendances. Peter Parez, Arnaud de Thier et Cedric Alter, Avocats chez Janson, nous en livrent quelques-unes essentielles, avec un conseil primordial à la clé : bien se faire accompagner.

Fusions et acquisitions d’entreprises

Lorsqu’on parle de fusions et d’acquisitions d’entreprises, Peter Parez et Arnaud de Thier sont catégoriques : « À l’heure actuelle, le marché est extrêmement frileux. Craignant les risques et les dettes, les banques sont réticentes à financer les actions de restructuration.  » Toutefois, ajoutent-t-ils aussitôt, «  il reste de réelles opportunités permettant aux entreprises de financer une restructuration. Même si les audits sont désormais plus exigeants et les demandes de garanties plus poussées, il ne faut pas avoir peur de s’engager : vu la réactivité du marché, les restructurations offrent toujours de belles opportunités de croissance. »

Dans le cadre de toute restructuration ou procédure de transfert, notre interlocuteur conseille de bien se faire accompagner, « en se tournant vers des cabinets full service tels que Janson pour pouvoir approfondir davantage les audits en matière RH, immobilière, administrative, de propriété intellectuelle, etc. » Un autre conseil donné par Arnaud de Thier est d’être bien plus patient qu’auparavant. Il s’agit de rassurer l’acquéreur ou le futur associé : « Avant la crise sanitaire, nous avions l’habitude d’avoir des transactions rapides. Aujourd’hui, la réflexion, les négociations et les audits prennent plus de temps, que ce soit lorsque des petites structures souhaitent intégrer des plus grosses structures, à la recherche de financements intragroupes, ou lorsque les grosses structures en quête d’opportunités se font accompagner judicieusement quand elles désirent intégrer de petites structures dans le but d’acquérir des nouveaux talents ou des parts de marché. »

Réorganisations judiciaires

Lorsqu’une entreprise ne parvient à surmonter ses difficultés financières, elle doit parfois passer par une restructuration judiciaire, avec les procédures de réorganisation judiciaire – ou PRJ – prévues à cet effet.

Ces procédures ont récemment fait l’objet d’une réforme. Comme le précise Cedric  Alter, «  la nouvelle loi, qui transpose une directive européenne, introduit un système de vote des plans de réorganisation par ‘classes  de créanciers’. Dans le prolongement de la loi sur la continuité des entreprises, ce système, obligatoire pour les grandes entreprises et optionnel pour les PME, présente l’avantage de permettre à l’entreprise de passer outre le blocage de la restructuration par un seul créancier ou un seul groupe des créanciers, moyennant certaines conditions évidemment. » Jusqu’’ici, il n’était pas rare qu’un créancier ayant une créance importante puisse bloquer une réorganisation judiciaire  ; un tel scénario pourra à présent être évité.

En contrepartie, les créanciers obtiennent l’assurance qu’ils ne seront pas moins bien traités dans le cadre d’une restructuration qu’ils ne le seraient dans le cadre d’une faillite ou d’une liquidation judiciaire. « Pour le législateur belge comme européen, tout l’art est d’avoir mis en place un système relativement équilibré, qui ne soit pas exagérément pro débiteur ou pro créancier. »

Cedric Alter souligne encore que la nouvelle loi renforce les outils confidentiels et préventifs à disposition d’une entreprise en difficulté : « Un des objectifs de la directive européenne est de repérer le plus tôt possible les entreprises en difficulté financière, en améliorant les outils de détection. De plus, on s’est rendu compte que pour certaines entreprises, rien que le fait de dire publiquement qu’elles sont en restructuration leur pose un préjudice commercial. Elles pourront à présent avoir recours également à une procédure sans publicité »

Pour lire l’entiereté du dossier « Optimize Your Business » avec Le Trends Tendances : Fusions, acquisitions, PRJ : du neuf pour les entreprises (planet-business.be)

Cédric ALTER – c.alter@janson.be

Peter PAREZ - p.parez@janson.be

Arnaud DE THIER - a.dethier@janson.be

Foreign Subsidies in the EU: the EU control is now a reality!

On 12 July 2023, the Foreign Subsidies Regulation (“FSR”) started to apply, which means, among other things, that  the EU Commission may launch ex officio investigations on foreign subsidies in the EU.

Companies operating within the EU are indeed subject to a new set of rules aimed at countering the impact in the EU of potentially distorting subsidies from third countries. Two days earlier, on 10 July 2023, the EU Commission had adopted the Implementing Regulation detailing the procedural aspects for the implementation of the FSR.

Main guidance of the Implementing Regulation can be summarized as follows:

Reporting requirements  :

•  For concentrations: parties to the concentration must provide detailed information on all individual financial contributions (1) granted within the past three years, (2) amounting to at least €1 million, and (3) most likely to distort the internal market.  For the foreign financial contributions that are unlikely to distort the internal market, companies are just required to present an overview of financial contributions received over the past three years and amounting individually to at least €1 million.  Particular attention will be paid on financial contributions of €45 million or more over the past three-years.

•  For public procurements: companies must provide detailed information on all financial contributions (1) granted within the past three years, (2) amounting to at least €1 million, and (3) most likely to distort the internal market.  For all other foreign financial contributions, companies must provide an overview when the financial contribution amounts individually to at least €1 million, with a focus on contributions of at least €4 million per country over the last three-years.

  Notification Procedure

Starting from 12 October 2023, companies will be required to notify the EU Commission of any concentrations and participation in public procurement procedures that involve foreign financial contributions and meet the applicable notification thresholds.

The Implementing Regulation provides specific notification forms for each procedure, identifies the authorized person or entity responsible for submitting the notification, and specifies the effective date of notification.  It also gives some guidance on the articulation of that notification with other notifications under the EU regulation on merger control and on the regulation on the control of foreign direct investments.

Commission's Investigation Process

The Implementing Regulation details the procedures to be followed by companies when submitting commitments to address the concerns raised by the EU Commission during the investigation.

Procedural Rights of Parties

The Implementing Regulation defines the rules regarding the rights of the involved parties concerning the protection of confidential information, access to files and the opportunity to submit their observations.

For further information, please see our article on “The Council adopts the EU Regulation to control distortive foreign subsidies”. 

                                                                                                                                                                                        For more info, please contact: 

Bruno LEBRUN – Partner - b.lebrun@janson.be 

Candice LECHARLIER - c.lecharlier@janson.be

Wafa LACHGUER – w.lachguer@janson.be

Foreign Subsidies Regulation : Key Dates

The Foreign Subsidies Regulation (“FSR”) entered into force on 12 January 2023. This new legislation regulates the competitive distortions caused by foreign subsidies and attempts to ensure a level playing field for all companies operating in the EU.

Three new rules:

• The obligation to notify to the Commission concentrations involving a financial contribution by a non-EU government where (i) the acquired company, one of the merging parties, or the joint venture generates an EU turnover of at least €500 million, and (ii) the foreign financial contribution involved is at least €50 million;

• The obligation for companies to notify the participation in public procurement procedures, where (i) the estimated contract value is at least €250 million and (ii) the foreign financial contribution involved is at least €4 million per non-EU country;

• For all other market situations, the Commission, on its own initiative, can conduct ex-officio investigations when it suspects distortive foreign subsidies. This includes the possibility to request ad-hoc notifications for concentrations and public procurement procedures below the required thresholds.

Therefore, for companies that may be involved in any of these scenarios in the near future, here are some key dates to keep in mind:

• 12 July 2023 : the FSR will start to apply as of 12 July 2023. So, companies that concluded concentrations or are engaged in public procurement procedures before 12 July 2023, do not have to notify the Commission under the FSR. This also means that, as of this date, the Commission will be able to start ex-officio investigations;

• 12 October 2023 : the obligation for companies to notify concentrations and public procurement procedures falling within the scope of the FSR will be effective as of 12 October 2023;

• Mid-2023 : in the coming weeks, the Commission will publish a Draft Implementing Regulation for review and comments by stakeholders. This instrument will clarify the applicable rules and procedures, including forms for notification and calculation methods of time limits. As of that date, stakeholders who wish to respond will have 4 weeks to provide their feedback. The finalised text should be adopted by mid-2023.

For more info, please contact:

Bruno LEBRUN – Partner - b.lebrun@janson.be

Candice LECHARLIER - c.lecharlier@janson.be

Newly released Treaty on Banking & Finance (Dec. 22, 22)

Janson is proud to inform you that two of its members, David Raes and Guillaume Bouton, are among the authors of the newly released Treaty on Banking and Finance that was published on December 22nd, 2022.

In chapter 15, David analyzes in great detail the EU Regulation 2020/1503 on European crowdfunding service providers for business as well as its ramifications under Belgian law, a topic on which David already wrote extensively in the past.

While in chapter 16, Guillaume co-authored a contribution on the new trending topic of Initial Coin Offerings and crypto-assets, exploring the European and Belgian legislation, both present and future, that govern the new financial services related to crypto-assets.

This double contribution is a testament to the importance of academic work among Janson’s lawyers. 

Full details regarding this new treaty can be found on the webpage of the editor Larcier.

The Council adopts the EU Regulation to control distortive foreign subsidies

On 28 November 2022, the EU Council gave its final approval to the new Regulation on foreign subsidies distorting the EU internal market and is due to apply by mid-2023. 

The new Regulation is part of the EU industrial strategy aiming to create “a model of open strategic autonomy” by, among others, avoiding unfair and abusive practices in the EU internal market:

 “The new measures will empower the EU to investigate and prevent the unfair practices supported by some non-EU countries. This will allow the EU to ensure fair competition and level playing field for all companies”. (Jozef Síkela, Czech Minister for Industry and Trade)

Companies would be well advised to identify whether they benefited from foreign subsidies in the past. 

If they do not run this exercise, competitors may do it for them as ex-post controls are an option available in the Regulation…

Read the full article written in English.

The contractual payment terms for commercial transactions may no longer exceed sixty days.

The statute of August 2, 2002 on combating  late payment in commercial transactions has been amended several times since its entry into force. The statute of 14 August 2021 is the latest of these amendments.

Flavie Vermander gives an overview of the amendments and analyses their impact on current contracts in the Journal des tribunaux (year 2022, n° 11).

Can illegally obtained evidence be used in civil cases ?

An article written by Didier Bracke, Hans Dhondt en Flavie Vermander.

Download the pdf written in Dutch.

Private Competition Enforcement Review

The "Private Competition Enforcement Review" is out. The Belgian chapter has been written by our Competition & EU team : Bruno Lebrun, Ulysse Bertouille & Candice Lecharlier.

The Private Competition Enforcement Review is a useful overview of the frameworks governing private actions for competition and antitrust law violations in key jurisdictions worldwide. With a focus on recent developments, it examines crucial issues including standing, evidence, collective actions, damages, settlement, alternative dispute resolution and much more. It also provides an outlook for potential future developments in this area.

Distortive foreign subsidies in the EU: step forward to the adoption of new EU Regulation

One year ago, the EU Commission proposed a Regulation to protect EU companies against distorted competition from foreign companies benefiting from the financial support of their government abroad (see our previous posts on this topic here).

The Regulation was more than welcomed as EU companies are under strict state aid control by the EU Commission.

Yesterday (4 May 2022), the EU Parliament and the Council agreed on their negotiating positions. They seem to endorse the main principles underlying the Regulation and negotiations are likely to focus on technical elements such as:

- exact amount of the companies’ turnovers triggering the EU Commission’s right to investigate a foreign takeover;

- value of a public procurement where a foreign company’s participation could call for investigation;

- involvement of the Member States’ national authorities in the review of distortive foreign subsidies; and

- period during which the EU Commission may investigate subsidies granted before the entry into force of the Regulation (5/10 years?).

The Regulation on foreign subsidies could be fairly quickly adopted by the two EU co-legislators.

Inquiries ? Get in touch with our head of practice, Bruno Lebrun.

New rules on price promotions from 28 May '22: The comeback of the reference price

Is your promotional strategy in line with the new regulations?

As of May 28, 2022, the regulations on price promotions will change dramatically. In short, the rules on announcing price promotions will become significantly stricter and there will be less flexibility for the advertiser in terms of the calculation method and presentation of the promotion. From now on, a company may only advertise a price promotion relative to the lowest price it applied in the thirty-day period preceding the announcement of the price reduction. Moreover, the reference price must be explicitly indicated in the price promotion.

The rules on price promotions are actively enforced by the FPS Economy. Violations are subject to serious sanctions, including criminal fines of up to EUR 80,000 or 4% of the total annual turnover.

Download the pdf written in Dutch.

Summary of the content of the Public Procurement Directive as it applies to "classical" public authorities

Kris Wauters has recently published a new article in the Jurisclasseur (France) which summarizes, in the light of the case law of the Court of Justice, the content of the Public Procurement Directive as it applies to "classical" public authorities.

Download the 25 pages pdf written in French.

Proposed regulation against harmful foreign subsidies in the EU

On 5 May 2021, the European Commission (the “Commission”) proposed a legislation that regulates foreign subsidies causing some distortion of competition in the European Union (see Proposal for regulation). 

This major piece of legislation is one of the seven key actions defined in the new EU industrial policy to create and affirm its “open strategic autonomy”. Its purpose is to protect the EU through a better control of foreign companies benefiting from foreign subsidies, in particular at a time where the pandemic contributes to make a number of EU companies more vulnerable.    

The proposed regulation aims at filling a regulatory gap in the EU and contributes to ensure a fair level playing field for all companies operating in or towards the EU.  In the words of Commissioner Vestager: “[…] this new regulation - together with our State aid rules - will make us the first trading bloc in the world with tools against harmful subsidies, from both inside the Single Market and from Non-EU countries. And that, in turn, will help make our markets more fair and contestable.“

In fact, this proposal amounts to a control of subsidies granted by foreign countries, in a similar manner as EU companies are subject to State aid control.  It complements, among others, the recent EU framework for screening the foreign direct investments in the EU (11 October 2020).

From a policy point of view, the pandemic has accelerated the awareness that the EU must have a solid independent industrial policy, no longer be affected by strategic dependencies, and protect its strategic assets and industries through stricter rules like the proposed regulation.

From a non-EU investors’ point of view, the proposed legislation constitutes a major new regulatory layer that they should seriously consider when contemplating operations and investments in the EU.  The Commission will indeed most likely be authorized to control ex-post a number of operations.  

« Forewarned is forearmed », as they say…

Foreign Subsidies – Wide Scope

The Commission Proposal addresses foreign subsidies granted to an undertaking engaging in an economic activity in the EU. A company acquiring control or merging with an undertaking established in the Union, or an undertaking participating in a public procurement procedure is considered to be engaging in an economic activity in the internal market (Article 1).

Further, it provides a definition of the notion of foreign subsidy: a financial contribution by a non-EU country conferring a benefit on an undertaking engaging in an economic activity in the EU internal market. Contributions consist in the transfer of funds or liabilities, including grants, loans, loan guarantees, tax incentives, and debt forgiveness.  The foregoing of revenues otherwise due amount to financial contributions (Article 2).

The notion of third country government includes not only central governments and government authorities, but also foreign public entities whose actions may be attributed to a third country’s government as well as any subsidies by private entities for whose actions may be attributed to a third country.  

The Commission Proposal defines the concept of market distortion: the beneficiary’s competitive position in the internal market has been improved as a result of a foreign subsidy which may, actually or potentially, negatively affects competition in the EU (Article 3).

The Proposal lists a number of indicators showing the existence of such distortion: the amount and the nature of the subsidy, the market situation and the level of economic activity of the beneficiary on the EU market as well as the purpose and the conditions attached to the foreign subsidy and its use on the European market.

Various categories of foreign subsidies are deemed likely to have anticompetitive effects (Article 4):

1. subsidies granted to undertakings likely to go out of business in the short or medium term without any financial aid. This does not apply to subsidies granted in the context of a restructuring plan resulting in a long-term viability of the beneficiary and including a significant contribution of own funds by the latter;

2. subsidies in the form of unlimited guarantees of an unlimited guarantee for debts or liabilities;

3. subsidies directly facilitating the completion of an economic concentration; and

4. subsidies enabling beneficiaries to submit unduly advantageous tenders based on which they would be awarded public contracts.

The Commission Proposal also lays down a de miminis threshold of EUR 5 million over any consecutive period of three fiscal years under which foreign subsidies are deemed to have no effects on competition in the market (much higher than the EUR 250,000 in the White Paper).

Balance of Effects and Remedies

The Commission has to balance the negative impact of the market distortions caused by the grant of a subsidy against its possible positive effect, such as the development of an economic activity.  

Depending on the outcome of its assessment, the Commission may impose redressive measures or accept commitments, and the nature and level of those redressive measures or commitments (Article 5).

The Commission may impose on beneficiaries various behavioral or structural commitments, including:

• offering access under fair and non-discriminatory terms to an infrastructure acquired or supported by the distortive foreign subsidies unless the right to fair and non-discriminatory access is already provided for by legislation in force in the Union;

• reducing capacity or market presence;

• refraining from certain investments; or

• licensing on fair, reasonable and non-discriminatory terms of assets acquired or developed with the help of foreign subsidies;

• publication of results of R&D;

• divestment of certain assets.

In addition, the Commission may order the parties to a concentration to demerge as well as the repayment of the amount of a subsidy, including an interest rate.

Further, should a beneficiary propose the repayment of a subsidy, it may accept such repayment as a commitment if it can ascertain that the repayment is transparent and effective.

Ex-officio investigations at any time, or ex-ante notification for concentrations and public procurements

The Proposal confers exclusive control over foreign subsidies to the Commission and defines three different investigation scenarios:

1. Review of foreign subsidies on the Commission’s initiative (ex-officio): The Commission may launch a probe regarding alleged distortive foreign subsidies in any sector of the economy on its own initiative. Such reviews are not limited in scope and may target any instance where foreign subsidies are granted to an undertaking active in the EU market.

2. A prior notification requirement for concentrations involving foreign subsidies and meeting two jurisdictional thresholds:

• the target or at least one of the merging undertakings is established in the EU and generates an aggregate turnover in the EU of at least EUR 500 million; and

  1. one party has received from third countries an aggregate financial contribution in the three calendar years prior to notification of more than EUR 50 million.

The notion of concentration seems to comply with the definition of the EU Merger Regulation on the control of concentrations.

The Commission may request the notification of concentrations not satisfying these thresholds at any time prior to their implementation should it suspect the grant of foreign subsidies over the last three years preceding the transaction.

1. A prior notification requirement when participating in public procurement procedures. This requirement applies in scenarios where foreign subsidies cause or risk causing a distortion in a public procurement procedure, enabling the beneficiary to submit an unduly advantageous tender in public procurement procedures with an estimated value equal to or above EUR 250 million.

Undertakings submitting a tender or a request to participate in a public procurement procedure would be required to inform the contracting authorities or entities of all foreign financial contributions received during a three-year period preceding the notification. Alternatively, undertakings would be asked to confirm in a declaration that they have not received any subsidies (Articles 18-23).

Furthermore, the Commission may launch an investigation when it suspects that the undertaking in question has benefited from foreign financial contributions over the three years preceding the submission of a tender. It must be borne in mind that the review of tenders may be pursued (Article 28).

Important:

• The three types of investigations are complementary in nature (Recital 37 and Article 33): in other words, the Commission will be empowered to carry out reviews of already implemented concentrations or awarded public contracts on its own initiative (Recital 31);

• Prior notification requirements for concentrations and public procurement procedures may apply even if financial contributions eventually do not qualify as “foreign subsidies” or have no impact on the internal market.

Review Process

The Commission Proposal sets out a two-phase review process:

1. Phase I: in this preliminary phase, the Commission will assess the existence of a foreign subsidy likely to distort the functioning of the internal market;

2. Phase II: should the Commission’s initial review reveal sufficient indications of a foreign subsidy distorting the internal market, the Commission may initiate an in-depth probe.

The Commission Proposal lays down specific timelines regarding investigations related to concentrations and public procurement procedures.

• Regarding concentrations: preliminary review within 25 days and in-depth review within 90 working days from its opening. Investigations in Phase II may be extended by further 15 working days where commitments are offered and eventually extended by up to 20 working days if requested by the notifying party or the Commission (Articles 23-24).

• For public procurement: its preliminary probe within 60 days and Phase II probe within 200 days from receipt of the notification. The review period for Phase II probes may be extended “in exceptional circumstances” (Article 29).

The Commission will have far-reaching powers to order interim measures and to request information from the undertakings concerned, other undertakings, associations of undertakings, Member States or third countries.

It is noteworthy that the Commission will have the powers to carry out inspections within the EU, with the assistance of the authorities of the Member States, but also outside the European Union, with the consent of the undertakings concerned and of the government of the relevant third country (Articles 12-13).

Redressive measures – Commitments - Fines

The Commission may impose redressive measures or accept binding commitments by the undertakings concerned in order to remedy the distortion identified.

It may also prohibit a concentration.

For concentrations and public procurement, the Commission may impose fines up to 10% the aggregate turnover of the company failing to notify in advance a concentration or its participation to a public procurement as defined above. The fine is limited to 1% of that same turnover when providing misleading or incomplete information.

The Commission may impose fines and periodic penalties in the case of a breach of the redressive measures imposed, commitments accepted or interim measures:

• Fines may reach up to 10% of the aggregate turnover of the undertakings concerned in the preceding business year;

• Periodic penalty payments may reach up to 5% of the average daily aggregate turnover of the undertakings concerned in the preceding business year for each working day of delay.

Risks for foreign subsidies granted before the entry into force of the proposed regulation

The Commission Proposal foresees that subsidies granted prior to the date of application of the proposed regulation could still be subject to scrutiny in the following circumstances.

The Commission would be entitled to review foreign subsidies granted within 10 years prior to date of application of the proposed regulation in cases such foreign subsidies distort the internal market after the date of application of the Regulation.

When notifying concentrations or in the context of public procurement procedures, companies will have to notify all foreign financial contributions granted over the last three years prior to the date of application of the proposed regulation. However, the new review mechanism will not apply to (i) concentrations agreed, announced or completed before the date of application of the proposed regulation, nor to (ii) public procurement procedures initiated before the date of application of the proposed regulation.

Next Steps

The Commission Proposal must now go through the EU’s ordinary legislative procedure and may be subject to discussions and eventual amendments by the European Parliaments and the Council. 

The Commission Proposal is in line with the ongoing trend of a stricter scrutiny by the authorities of several Member States of investments by non-EU investors, which can be witnessed over the past three years. Once entered into force, it will impose stricter transparency obligations to foreign investors.

Investors will need to take into account risks of longer and tougher review process and considerable sanctions for non-compliance with the proposed regulation.

For additional information, please contact Bruno Lebrun or Ulysse Bertouille.